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Cash for Private Practice?

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  • Cash for Private Practice?

    Hi all, posting this topic after realizing that the question is more of a personal finance one vs. home buying (not sure if there is a way to transfer a post from one forum section to another so reposting here). Essentially, my spouse and I are seeking advice on the classic pay off debt vs invest question and I’m not going to act like the situation is unique or that there is a “wrong” answer - just looking to bounce some ideas off of a trusted community of forum members!

    My spouse is a physician (pediatrician) and we are trying to decide between holding money in a PSLF side fund & utilizing a doctor loan vs. putting 20% down on a house. Listing some of the key figures / financial decisions below but the crux of our decision lies in that my spouse is interested in having the option to open a private pediatric practice in the future (TBD on timeline but possibly within the 120 PSLF payments). This is giving us some pause on applying cash to our house down payment since we would likely be in a better psychological place on deciding to open a private practice once the side fund is fully funded - we absolutely recognize that our savings rate (comfortably set at 40% of gross) is the most important decision and not one we plan on changing either direction we chose on this decision.

    We have owned a home before so appreciate the added costs over renting and we are confident that the area we are purchasing in will be a long term location for us so not seeking advice on whether to purchase or not.

    - Student loan balance (all PSLF eligible): 221k, 40 payments made and spouse currently employed at 501(c)(3), 80 more payments to qualify for forgiveness
    - Current PSLF side fund balance: 106k
    - House purchase price: 455k
    - Locked in effective mortgage rate: 3.11% (15 year, conventional)
    - Combined income: 406k
    - Net worth: 272k
    - Max out all retirement accounts, HSA, backdoor Roths
    - Present value of PSLF benefit (forgiveness less required payments): 116k due to MFS + PAYE and significant tax deferred account space to minimize IBR payments, note that we live in a community property state so there isn't a marriage "tax" (or benefit) so that factor has been taken into account in these calculations.

    Happy to share additional information if useful and thanks in advance for the consideration and advice!

  • #2
    With respect, what alternate scenarios are you seeking advice?


    • #3
      Originally posted by Tim View Post
      With respect, what alternate scenarios are you seeking advice?
      Main question is how much value to put on holding cash for a private practice that may start in the next few years - we can either utilize the 20% down payment on a 455k purchase priced house (91k) to build home equity or hold it and utilize a doctor loan to give some sense of comfort that we could either write a check and be done with student loans (if the decision to go private is made) or have the cash to help float the new practice. We realize that that isn't necessarily a "wrong" answer on how to utilize these funds, just interested in what others would do with these facts. Thanks!


      • #4
        What is the actual rate for 15 year mortgage, and what rate would you get on a doctor's loan? What kind of rate would you get on a business loan? etc


        • #5
          I would say investing in personal capital is a much higher priority than a house. Even if you need a loan, having the startup capital would factor in.
          Hate to see a lack of capital holding up going to pp if that’s the choice.